MONTPELIER — State officials are investigating how federal health care reform may allow Vermont to save on the cost of providing health services to its incarcerated population.

The federal Affordable Care Act, coupled with a proposed revamped system of delivering health care to certain prisoners, could save the state a significant amount of money, according to officials in the Department of Vermont Health Access and the Department of Corrections.

Federal health care reform — which required states to launch health insurance marketplaces Oct. 1 — could allow Vermont detainees to receive medical services under insurance plans on the exchange. Detainees are people who are incarcerated while awaiting court action.

Federal statutes prevent Medicaid — a shared state and federal program — from being used to provide health care to people behind bars. That exclusion continues under the Affordable Care Act, according to Mark Larson, commissioner of the Department of Vermont Health Access.

“Federal regulations have precluded Medicaid funds from supporting health services for anybody who is incarcerated,” he said. “When you go to jail, even if you’re on Medicaid when you go in, federal dollars can’t be used to support your health services.”

Also, inmates already convicted and serving a sentence do not qualify to use the new exchanges. Instead, they must continue to use the health care services provided at the state prison where they are incarcerated. Those services are provided by a contractor paid from the state’s general fund.

But detainees who qualify for a non-Medicaid plan on the exchange may now be able to use exchange insurance plans while in jail, potentially saving the state the cost of providing health care for them.

“One of the new aspects that we’re exploring under the Affordable Care Act is that while Medicaid funds still can’t be used to support health services, they still are eligible to apply for a qualified health plan on the exchange,” Larson said. “That seems to mean that, potentially, they could access private coverage through an insurance marketplace.”

Vermont Health Access is working with Corrections to explore the intricacies of ACA and use all of the provisions to best benefit Vermont, Larson said.

“We need to work with the federal government to understand the regulations,” he said. “What’s important is how the federal government will interpret those laws and give us guidelines on how to implement them.”

‘Vermont specific’

The one thing that seems clear about the law is that detainees will be eligible for health insurance plans on the exchange.

“I think we are fairly confident that (for) those who are being detained and have not been sentenced to incarceration, there are options there,” Larson said. “We just need to figure out exactly what they are and how to avail them to offenders.”

Dr. Delores M. Burroughs-Biron, director of health services for Corrections, said the state has an average daily population of about 400 detainees (distinct from sentenced convicts). It’s still unclear, though, how much the state could save if many of them are enrolled in private exchange plans, she said.

The federal government does allow inmates who are admitted to a hospital to use Medicaid plans for which they are eligible. Burroughs-Biron said the state is using that allowance whenever possible.

“You can utilize Medicaid dollars for someone who has been incarcerated when they are actually not in the institution and admitted to the hospital for greater than 24 hours,” she said.

While ACA is implemented, Corrections officials are simultaneously working to redesign the entire health services system within the department to make it “Vermont specific” and more cost-effective.

Burroughs-Biron said the contracted health services now provided in Vermont prisons is a one-size-fits-all solution for states.

“With privatized companies you tend to have to buy a package and you have to redesign it and tweak it to get it to work for your system,” she said. “Vermont is unique and different, and so we have to do a lot of tweaking.”

Officials hope to create a system, using changes in the health care system brought about by ACA, “that involves the community so we don’t lose that connection, the inmate doesn’t lose that connection with their community when they come in.”

More than 80 percent of people who are incarcerated in Vermont are there for “a very short amount of time,” she said. A better system is needed to help inmates transition between the community and jail, she said, without losing health coverage.

“Whether or not somebody is in Corrections, they have a need for some sort of health care plan,” Burroughs-Biron said.

‘Huge opportunity’

The Legislature, in an effort to reduce repeat offenses, passed a law in 2011 that included a provision to study health care within Corrections. The state hired a group, Community Oriented Correctional Health Services, to help create a revamped system that takes into account reform efforts at the state and federal level.

“I really wanted to make sure that we didn’t exclude anyone, and so did the Legislature,” Burroughs-Biron said. “They agreed that inmates should be part of the broader change that was happening in Vermont.”

She said the group is helping the state determine if health services could be provided better and more efficiently through a system that is offered by a privatized company.

Corrections will continue to provide full health care services to inmates, but must focus more on continuity of coverage for inmates as they transition between the community and incarceration, she said.

“We provide everything. We are a comprehensive provider of health care,” Burroughs-Biron said. “When someone leaves us and they don’t have insurance and they return to the community, chances are they won’t be getting (comprehensive care) unless they qualify by income. This is a huge opportunity.”

Continuity of coverage is critical, she said, because studies have shown that “a lack of health care is a risk for recidivism, for returning to a correctional setting,” she said.

“One of the things we are very interested in, at a minimum, is when somebody comes back to the community from a correctional facility, is that we do everything we can to have them covered, whether through Medicaid or the exchange,” he said.

Continuity of coverage

In Vermont, Medicaid coverage is terminated when someone is incarcerated. That means the inmate must reapply for health care benefits upon exiting a prison, according to officials. That process takes time and leaves people uninsured in the meantime.

Larson said it would make more sense to suspend benefits rather than terminate them during incarceration.

“I know that the Department of Corrections takes steps to try to enroll people when they’re coming out of facilities,” he said. “What we would ideally like to do, when somebody comes if they’re enrolled in Medicaid, in essence, (is) to keep them enrolled even though the coverage is suspended, so they don’t have to reapply when they come out.”

Ensuring continuity of coverage will save money, Burroughs-Biron said. The incarcerated population tends to be a higher-risk group and they will require medical services both inside and outside of prison, she said. Outside prison, without insurance, the cost will continue to be shifted to others.

“You have this group of people who are wandering around uninsured,” she said. “They’re going to end up costing the system quite a bit of money whether they’re in or they’re out (of prison).”

The combined efforts of state and federal government should deliver savings and improved coverage for a population that is typically expensive to insure, and often does not carry coverage, Burroughs-Biron said.

“I think at this point it has the potential to be positive but I think there are still a number of unknowns. I think the potential lies in its ability to decrease the cost to the state,” she said.

“And, greater than that, the greater potential comes in the perspective of the individual, it also has the potential to help us ensure that individuals who leave us will in fact have the requisite health care to sustain them in the community.”